Base metals traded at LME have enjoyed their best quarterly performance in Q1 since 2009. The LMEX index rose by 9.1% for the period, while prices of all metals gained, with the exception of lead whose price remained unchanged. The best performer was nickel, soaring by over 21%. As so often, the main contributor to this price growth was China – the country’s official Purchasing Managers’ Index (PMI) rose to 50.5 and private manufacturing survey index Caixin’s PMI to 50.8 in what is indicative of both indices’ entering an expansive phase that is well above expectations. Stimulus measures taken by the government and Central bank have already provided their desired impact, but the tax cuts that are effective as of April 1 should further support China’s economic growth.
Another boost to base metals came after both China and the United States announced “new progress” in the latest round of trade talks that wrapped up on April 5 in Washington. During a meeting with Chinese Vice Premier Liu He, US President Donald Trump declared that both countries were close to a trade deal, even if some details still need to be worked out before a final agreement can be reached. Nonetheless, the prospect of finally resolving long-standing trade issues led speculative financial investors to expand their net long positions in copper, aluminium and nickel in the last week of March, the LME’s statistics showed.
At US$ 1923/t, the aluminium price reached a three-month peak on March 20, after major producer Norsk Hydro was hit by a cyber-attack that caused its smelters to switch to manual operation and some extrusion plants to be shut. However, the company was able to recover and regain normal production, with the price “back in the normal” with an average of US$ 1860 per tonne so far in April – the same as the average price in Q1.